According to the Company’s FORM 10-Q for the quarterly period ended June 30, 2004, in July 2004, the Federal District Court approved the settlement between the former stockholders of Mecklermedia and the Company. At June 30, 2004, the company recorded a liability of approximately $4.6 million, which reflects its portion of the $7.0 million settlement amount and separately recorded an insurance receivable in the same amount.
As summarized by the Company’s FORM 10-Q for the quarterly period ended March 31, 2003, on May 16, 2001, the United States District Court for the Southern District of New York granted the Plaintiff's motion for certification of a class consisting of all former stockholders of Mecklermedia who tendered their shares in the tender offer. On October 17, 2001, the District Court denied the Company's motion for a summary judgment. On November 26, 2002, the District Court denied a motion for judgment on the pleadings filed by the Company. Expert discovery is proceeding and the court has ordered the parties to submit briefs concerning the valuation dates by the parties' expert witnesses and has scheduled the oral arguments on the issue for June 30, 2003.
According to the firm's 10-K filing dated 3/29/2001, in connection with the acquisition of Mecklermedia Corporation, on December 1, 1998, a lawsuit was brought against the Company by Ariff Alidina (the "Plaintiff"), a former shareholder of Mecklermedia Corporation, in Federal District court in the Southern District of New York for an unspecified amount, as well as other relief. The Plaintiff has claimed that the Company violated the federal securities laws by selling Mr. Meckler, a beneficial owner of approximately 26% of the shares of Mecklermedia, an 80.1% interest in internet.com Corporation for what the Plaintiff alleges was a below-market price, thereby giving to Mr. Meckler more consideration for his common stock in Mecklermedia Corporation than was paid to other shareholders of Mecklermedia Corporation. The Company intends to vigorously defend this suit. In January 2000, the United States District Court for the Southern District of New York denied class certification for this case. Two other former shareholders have since moved to intervene as plaintiffs and renewed the motion for class certification. This motion was also denied by the United States District court for the Southern District of New York.
The original Complaint alleges that the company entered into an agreement with the CEO of Mecklermedia to pay him a higher per-share price for his interest in Mecklermedia than the price offered to other Mecklermedia shareholders. The Complaint further alleges that the higher price was an inducement to the Mecklermedia CEO to approve the tender offer. Another inducement allegedly was the agreement that, after the Mecklermedia acquisition, the Mecklermedia CEO would be able to acquire 80% of a newly formed Penton Media subsidiary at a price substantially below market value.